Assessing the Strength of Implicit Government Guarantees Using the PMC Index

DOI: https://doi.org/10.62517/jel.202514613

Author(s)

Yan Zhang, Yixiang Tian, Lin Chen*, Qi Wang

Affiliation(s)

School of Management and Economics, University of Electronic Science and Technology of China, Chengdu, China *Corresponding Author

Abstract

Implicit administration guarantees are widely perceived in financial markets, yet their strength is difficult to quantify. This paper proposes a novel approach to measuring the strength of implicit administration guarantees by text analysis techniques. By analyzing the documents of administration's management of municipal investment bonds, management signals were extracted. Empirical evidence shows that the PMC-Index effectively captures temporal variations in perceived implicit administration guarantee strength from 2008 to 2024, revealing a gradual weakening of implicit administration guarantees over time. The results demonstrate that the PMC-Index provides a useful quantitative tool for measuring implicit administration guarantees.

Keywords

Implicit Administration Guarantee; Municipal Investment Bonds; PMC-Index; Text Analysis

References

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